Closed factories, canceled travel and postponed conferences have created problems for small ... [+]
Stenomatic.ai, a small London business offering real-time transcription and translation for conferences, watched over the past two weeks as uncertainty over potential event cancellations stemming from the coronavirus outbreak quickly evolved.
One week, the firm was “nervously joking” with clients that they might need to call off their events, CEO Boris Sebosik said via email. The next, he explained Friday, “they are actually doing it,” which means canceled contracts.
While fears over the growing global coronavirus outbreak sparked widespread economic worries and wild stock market swings last week, small business owners have felt the ripple effects of canceled travel reservations, scrapped conferences, closed factories and jittery consumers.
Businesses from pet hotels to tour operators to smartphone repair shops and fashion brands, among others, are facing challenges tied to corporate, government and consumer response to the virus. Emails from several owners in recent days describe various interruptions to business as usual.
Canceled travel plans, for instance, have touched an array of businesses, like Las Vegas-based tour company MaxTour.
“We have had a cancellation rate of more than 60 percent for our tours already this month, and we expect that to get worse,” founder Matthew Meier said last week. “We are going to try to ride it out and keep all of our employees, however the longer this (outbreak) continues the harder that will be.”
In Huntington Beach, Calif., luxury dog hotel and day camp Paws Chateau had four customers call off boarding reservations as of Thursday because coronavirus concerns had prompted their own trips – including a three-week cruise in Asia and a 10-day Europe trip – to be canceled.
“If a quarantine happens, we will definitely feel the effects,” said owner Louise McCullough. “If people are working from home, they won’t need to put their dogs in day camp. Many of our dog day campers come in every day because their family is at work.”
If people are quarantined or sick at home, McCullough said she’ll consider offering special reduced rate promotions “to keep the dogs' schedules on track, ensuring they stay interactive and social.” Insurance doesn’t cover loss of earnings for this type of situation, she said.
Consumer fears about the virus’s effect on their pocketbooks also come into play.
Judd Builders, a custom homebuilder and remodeler in Asheville, NC, had clients halt preparations for major renovation projects after watching Wall Street gyrations last week, according to spokeswoman Lauren McKinney.
“In the past couple of days we've had clients that were in the beginning planning stages of large scale home remodel projects … put a stop to the projects, citing the volatility in the stock market caused by coronavirus,” she said. “We haven't noticed a change with our vendors and suppliers yet, but anticipate some building materials will increase in price.”
Conference cancellations have wide-reaching effects.
Acer Exhibits & Events of Havre de Grace, MD, which designs and fabricates trade show exhibits for different industries, now faces complicated logistical challenges.
“Freight is considerable for some of these exhibit properties. In some cases, we have truckloads of freight forward-staged or en route, which have to be handled. Some shows have postponed without announcing future dates, so it is hard to know which coast the freight even needs to be on – many clients have one set of properties which travels around the country on their show circuit,” said Acer’s marketing manager, Wendi Jacobs.
“Between clients, show organizers, labor unions, freight handlers, intermediary agencies and our own internal processes, every show has so many moving parts to bring it together. Our teams are working hard to stay on top of everything and sorting out liabilities and cost responsibilities on some of these things, while trying to minimize sunk costs to our clients and ourselves,” said Jacobs.
“When your whole business is time-sensitive with four- to six-month lead times, it is a complicated challenge to rebalance schedules and plans for dates that may or may not be scheduled in the future! We are concerned about the next several weeks,” she added.
Meanwhile, Chinese factory closures have made it hard for some U.S. businesses to secure parts and inventory.
Jet City Device Repair, which fixes more than 22,000 electronic devices a year in Chicago and Seattle, has had trouble filling all customer orders because of the factory shutdowns and is getting lower margins on the repairs it can do as it turns to more expensive domestic suppliers.
While the company is accustomed to two weeks of plant shutdowns every Chinese New Year, the coronavirus outbreak has extended that to five weeks this year, “and there is still a lot of uncertainty,” Jet City Device Repair founder and owner Matt McCormick explained.
The company has started ordering from domestic suppliers but the parts, which tend to be more expensive in normal cycles, are even pricier now given the current shortage, and the quality can be less reliable, according to McCormick. Also, the regular domestic vendors are running out of stock, which leaves unknown vendors as the next option.
HeadsetPlus.com, a Redwood City, Calif., company that sells office headsets, has seen most of the factories it sources from close amid the coronavirus outbreak, owner Yungi Chu said.
“They are not even answering the phones when I call. Nothing is shipping, nobody is working. We have orders that typically ship within one or two business days from China, now it’s taking four weeks-plus,” he said. With factory orders on hold and some items out of stock, customers have had to cancel orders.
Chu hasn’t reduced employee hours yet but said he may have to if the situation worsens.
Meanwhile, Phillip White, founder of Dallas-based men’s activewear brand Phit Clothing, expects Chinese factory closures to delay his 2020 collection. White had planned to have his samples made shortly after the Chinese New Year factory holiday.
“Once more information came out about the virus and the amount of cases reported I anticipated trouble and emailed my factory and they told me they were closed due to the coronavirus. They have recently opened but it will take a while for them to get back on track,” he said. “Even if they get my samples ready I’m worried about them being able to ship my items to me in the U.S.”
First in a series of reports about coronavirus outbreak effects on small businesses.
